What we are seeing in the markets in the past week is more of the same rhetoric from the week before. Bulls are trying to catch the latest whiff of positivity regarding Bitcoin’s price, waiting to see if it will break through the 200 D SMA (which is now playing resistance to further upward price movements). At the same time, bears are looking for the next dump to confirm the downtrend we have been in since June. If the 21 D SMA breach through the 200 SMA on Thursday wasn’t a confirmation, then at least we could still use BTC’s parabolic growth curve as a proxy for near term downward pressure. The mid-week 14% surge was more or less a BTC tease with the price action ending at about 4% up at the end of the week. What is also notable to point out is BTC’s dominance, currently at 66%, and it is slowly losing out to the alts

 

Since the 20% BTC price drop confirming a triangle breakdown we experienced on September 24th, its all been up, up, and away for the top alt coins with Tron leading the pack at a 25% gain. But let’s not get ahead of ourselves with Tron just yet, it’s still a little bit of a laughing stock amongst the top altcoins. How can Tron rocket to 1 dollar from just 1 cent? (what happened with Tron before?)

But the altcoins leader of the past week is hands down Binance coin, up 15%, with the RSI pushing back up towards the 50 level. It was also Binance that gave the most eyebrow raising piece of news this past week. WeChat and Alipay have both taken to social media denying Binance’s announcement that users can use their mobile payment services to buy crypto

As always, it’s important to take a step back to see the forest for the trees. We are still in a record-breaking unstoppable bull run in the equity markets. Gold is up 16% YTD with WTI Crude Oil up 21%. And despite two rate cuts this year, American bond markets this year has returned a strong 6%. US unemployment rates are still at record lows and a glimmer of hope in the US-China trade war on Friday gave some positivity to the markets. So, what’s the next thing that could give BTC the jolt that it needs? Surely, it needs to be something bigger as price action went numb after the SEC’s rejection of Bitwise’s ETF. Price action also did not seem to budge after several companies originally part of the Libra association fell out. Could we have already surpassed the vertical section of the S-curve growth? (what's S-curve growth?) Or is the next 2017 bull run in our sights? For any technological innovation, 10 years is a long time. But for a new medium of exchange or store of value adoption, 10 years is still short. Is BTC still an infant? Considering that most people still don’t know what role merkle trees play in BTC, maybe so (what's a Merkle Tree?). 

Three things to know

  1. BitGo has signed on board to provide custodial services for Europe’s largest exchange, Bitstamp. BitGo uses Class III bank-grade vaults for cold storage and has taken out a $100 million insurance policy through Lloyd’s of London, an insurance firm that covers against theft or the loss of cryptographic keys.
  2. The IRS, in the past week, came out with new tax guidance on cryptocurrencies. The major issues resolved include clarity around the taxing of blockchain forks, determining the correct cost basis to use, and tax calculations regarding the daily usage of cryptocurrencies.
  3. With Paypal withdrawing from the Libra association, the domino effect cascaded into this past week with Mastercard, Visa, Stripe, and eBay all dropping out on the same day. But is this a surprise? And more so, is Facebook surprised? 

Chart of the week

weekly chart 14.10.19

As the saying goes – the trend is your friend – the same can be said with the recent divergence in price movements between BTC and the RMB. As we all fret on the verge of what's going to happen next with BTC, the Fed, the SEC's decision on Bitwise's ETF, the US-China trade war, etc... It's good to also not forget how influential China has been in the news, or to the price of BTC, this past year and decade. With over 50% of the mining pools based in China and the birthplace of some of the biggest crypto exchanges facilitating the massive supply of BTC, China is more influential to BTC than most people think.

If we look at both BTC and RMB charts, there is a peculiar inverse relationship between the two. Are we poised for the next divergence as we can see on the top right?